What is a Credit Freeze?

Today, identity theft is now the number one crime in the nation. There are more than 14 million victims of identity theft each year. By following a few simple steps, you can definitely protect yourself from this crime. There are steps you can take to prevent this from happening even if you have a small inkling something is going on with your credit. The way to prevent this from happening to you is called a credit freeze.

If you start a credit freeze, when someone tries to open up an account under your information, they will be immediately stopped in the act. When opening up an account of whatever sort, the first thing creditors always do is use the information given to pull your credit report. There are hardly any lenders out there who will open a line of credit without first pulling the credit report. If you have placed a credit freeze under your name, creditors aren't even able to pull up your credit report. This means identity thieves are not able to open a fraudulent account under your name.

Does this mean that while you have a freeze you cannot open a line of credit? Simply put, no. If you need to open a line of credit, you can set up a PIN that will allow the creditors to pull your credit report. Using your PIN will basically allow the freeze to be temporary lifted so that your credit application can be processed and submitted. You can inform the person processing your application that you have suspected identity theft and that you have placed a temporary credit freeze under your name.

There is also a downside to placing your credit under a freeze. Each time you want to apply for credit, whether it be to purchase a car, apply for that new credit card, refinance your auto or mortgage loan, or even retail credit, you must lift the freeze using that PIN. This is just a hassle more than anything. If you know you are fixing to make a major purchase or a major move regarding your credit, you will have enough time to get the freeze lifted in order to process your application. The problem comes in when you want to open a line of credit instantly when you are inside a retail store or at a bank. It simply causes a delay in processing time.

With the rise of identity theft crimes and victims, consumers really do not want to take any chances. Cleaning up your credit report after an incident like this can be extremely time consuming and a great hassle. Not to mention it will cause delays in processing your applications if you are trying to make major purchases. This is the most effective way to prevent financial identity theft today!

If you want to completely freeze your credit, you must contact each of the three major credit reporting agencies. There are different fees that come along with doing this and they vary depending on your area. Typically, the fee is around $10; a minimal price to pay compared to what you would pay to clean up your report if you become a victim. If you happen to be a victim of identity theft already, the three credit bureaus will waive the fee for you.